Bitcoin 
$77,420 began December on a downtrend, following a calm Thanksgiving period. It fell from $91,000 to $86,000 during Asian trading hours, erasing significant gains from the previous week within hours. The drop was primarily driven by macroeconomic developments in Japan and China, coupled with statements that triggered concerns among institutional investors.
Asian Markets Shake Global Liquidity
The developments in Asia quickly reversed the global appetite for risk. Following the hawkish comments from the Bank of Japan’s Governor Kazuo Ueda, swap markets priced in a 76% possibility of an interest rate hike at the December 19 meeting. Japan’s two-year bond yield rose to 1%, marking its highest level since 2011. Simultaneously, China’s service sector PMI slipped into the contraction zone for the first time in three years, escalating concerns over slowing regional growth.
According to the latest market report published by QCP, these occurrences prompted investors to question whether global liquidity conditions have indeed loosened. Despite a supportive macroeconomic environment in the US, pressures emanating from Asia triggered a selling wave in the cryptocurrency market. Bitcoin quickly plummeted to $86,000 due to sales by Asia-centered investors, showcasing the fragile balance of the market.
Institutional Concerns Influence Market Behavior
A second factor deepening the decline in Bitcoin and other cryptocurrencies was the remarks from Strategy CEO Phong Le. Le noted that the company could sell its Bitcoin reserves if its shares fell below net asset value, sparking panic selling. His statement accelerated share exits from the company just before Nasdaq’s annual index review on December 12 and the end-of-month dividend payments.
On the macroeconomic front, fundamentals still seem supportive of the market. As of today, the quantitative tightening period has concluded, and Kalshi data indicates an 87% probability of an interest rate cut in December. Additionally, there is a 66% expectation that crypto-friendly Kevin Hassett will be appointed as Fed chair. Net inflows into spot ETFs have resumed. However, despite these positive factors, market sentiment moves in the opposite direction. Following a 15% recovery starting at $81,000, Bitcoin’s correction may be inevitable, but the main question is whether previous lows can be maintained.
Bitcoin and cryptocurrencies remain at the center of macroeconomic winds due to their highly liquidity-sensitive nature. If pressures from Asia persist, the end-of-year performance in 2025 could also be adversely affected.
